My Dad Checks In As Tax Day Approaches

The following conversation took place on the phone. Mike was in Virginia, Logan was in NYC. Logan wrote it down verbatim as she got in the office, so it’s not exact, but it’s close.

Mike Sachon: Have you done your taxes?

Logan Sachon: What do you think?

Mike: That’s what I was scared of. I’d hoped you’d done them. You’re running out of time, girl.

Logan: I’m going to file an extension.

Mike: Right. But you know that you still have to pay on time right? The extension is just for filing.

Logan: Well, right. But the fees on paying late are way less than if you don’t file an extension.*

*Fee for not filing/including not filing an extension: 5% of balance owed each month up to 25%, so, if I owe $2,000, which is a nice, round, hopeful number, my penalty would be at minimum $100 and at most $500, plus the original $2,000 that I owe, PLUS the fee for not paying, PLUS interest. This is a lot of money.

Fee for not paying: .5% of balance owed each month until paid off in full. So, on a $2,000 tax bill, that would be $10 a month until I paid, which doesn’t seem terrible to me, but is obviously not ideal.

Interest: In addition, the IRS also charges interest on unpaid taxes, currently 3% a year (not bad). On $2,000, that would be $60 a year, which comes out to 16 cents a day, which comes out to, I don’t care about this at all.